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Public and Private Hospitals

In May 2009 the Australian Government asked the Productivity Commission to examine three aspects of the health care system:

• the relative performance of public and private hospitals, with particular regard to the cost of performing clinically-similar procedures and the rate of hospital-acquired infections• rates of informed financial consent and out-of-pocket expenses for privately-insured patients in public and private hospitals• the most appropriate factor for indexing the Medicare Levy Surcharge income thresholds.

On releasing the Commission’s final report in December 2009, Commissioner David Kalisch said: ‘Comparing the relative performance of hospitals has been challenging. There are major differences within and between public and private hospital systems that make like-for-like comparisons difficult. There are also data limitations, which the Commission has sought to address by drawing on various data sources and incorporating adjustments to make the data more comparable. Future comparisons will be assisted by enhanced data collections for public hospitals already foreshadowed by governments and would be further improved by expanded reporting for private hospitals.’

Based on available data, the Commission’s experimental cost estimates indicate that public and private hospitals have similar overall costs, but there are differences in their composition. Medical and diagnostics costs, and prostheses costs are higher in private hospitals; while general hospital costs and capital costs are higher in public hospitals. The limited available evidence suggests that private hospitals have lower infection rates than public hospitals, but private hospitals on average treat patients who have a lower risk of infection.